Procurement departments of all companies’ sizes recognize that controlling both direct and indirect spending is an important part of keeping costs down. By creating value and promoting the sustainable competitive strength for the organizations. In the past decades, most organizations have primarily concentrated on maximizing management on direct spending. As it is directly linked to the raw materials, products, finished goods and services required for production.
It is simple enough to create a connection between the organizations expenditure on direct materials,which affect its overall efficiency and profitability. Indirect procurement requires a more complex and strategic approach to be properly valued and controlled. Indirect spending encompasses all that finances day to day business activities, beyond the development of products that the company provides to its consumers. It can account for between 25% and 40% of your company’s overall expenditure. Let us look into procurement techniques to manage indirect spend in the organization.